Infographic: Index Fund Comparison - Wealth Engineers (2024)

These days almost every investor is familiar with index funds. These incredible tools put the wealth creating power of companies all around the world right at your fingertips. Even better, they do so in low cost, well-diversified, and tax-efficient vehicles that are accessible to nearly every investor.

The term “index fund,” however, is very generic. In it of itself, it doesn’t tell us as investors very much. There are literally hundreds of different indexes that a fund company can choose from when designing an index fund. Even within a given asset class (e.g. US large cap stocks), the choices can be confusing.

With that in mind, I designed the index fund comparison infographic below to help showcase the key differences between the indexes used in some of the most popular index funds available today.

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Index funds and ETFs made up 35% of stock and 17% of bond open-end funds by the end of 2013.

In terms of total dollars invested, index funds represented 14% of the stock market and 3% of the bond market.

Many investors assume that all index funds are the same. For example, a common misconception is that all index mutual funds or ETFs track the S&P 500 index.

In reality, there are literally hundreds of different indexes available that track a wide range of stock, bond, and other asset classes. Fund companies may track one or many different indexes.

Below, we compare U.S. large cap, mid cap, and small cap stock indexes from three major index providers: S&P Dow Jones, Russell, and CRSP.

Often, there are significant differences between indexes:

Number of stocks in the index
The breadth of the index relative to the entire U.S. stock market
The depth of the index in terms of market cap
How often the index is reconstituted or rebalanced
Which fund families license an index making it available to investors

U.S. Large Cap Stocks

S&P 500 Index

– Market Cap of:

Largest Company: $560.4 Billion
Median Company: $18.1 Billion
Smallest Company: $3.8 Billion

– Approximate Coverage of Total U.S. Market Cap: 80%
– Reconstitution: Quarterly
– Number of Stocks: 501
– Top 10 Constituents

Apple Inc
Exxon Mobil Corp
Microsoft Corp
Johnson & Johnson
General Electric Co
Wells Fargo & Co
Chevron Corp
Berkshire Hathaway Inc
JPMorgan Chase & Co
Procter & Gamble Co

– Major Fund Families Using this Index

Russell 1000 Index

– Market Cap of:

Largest Company: $560.4 Billion
Median Company: $7.6 Billion
Smallest Company: $2.2 Billion*

– Approximate Coverage of Total U.S. Market Cap: 92%
– Reconstitution: Annually
– Number of Stocks: 1,026
– Top 10 Constituents

Apple Inc
Exxon Mobil Corp
Microsoft Corp
Johnson & Johnson
General Electric Co
Wells Fargo & Co
Chevron Corp
Berkshire Hathaway Inc
JPMorgan Chase & Co
Procter & Gamble Co

– Major Fund Families Using this Index

Vanguard
iShares
SPDR

CRSP U.S. Large Cap Index

– Market Cap of:

Largest Company: $560.4 Billion
Median Company: $12.8 Billion
Smallest Company: $753 Million

– Approximate Coverage of Total U.S. Market Cap: 85%
– Reconstitution: Quarterly
– Number of Stocks: 654
– Top 10 Constituents

Apple Inc
Exxon Mobil Corp
Google Inc Class A
Microsoft Corp
Johnson & Johnson
Wells Fargo & Co
General Electric Co
Chevron Corp
Berkshire Hathaway Inc
JPMorgan Chase & Co

– Major Fund Families Using this Index

Vanguard

U.S. Mid Cap Stocks

S&P MidCap 400 Index

– Market Cap of:

Largest Company: $11.4 Billion
Median Company: $3.9 Billion
Smallest Company: $1.3 Billion

– Approximate Coverage of Total U.S. Market Cap: 7%
– Reconstitution: Quarterly
– Number of Stocks: 400
– Top 10 Constituents

Affiliated Managers Grp
Equinix Inc
SL Green Realty Corp
United Rentals Inc
Schein Henry Inc
Advance Auto Parts Inc
Realty Income Corp
Endo International plc
Hanesbrands Inc
Trimble Navigation Ltd

– Major Fund Families Using this Index

Russell Midcap Index

– Market Cap of:

Largest Company: $29.9 Billion
Median Company: $6.3 Billion
Smallest Company: $2.2 Billion*

– Approximate Coverage of Total U.S. Market Cap: 28%
– Reconstitution: Annually
– Number of Stocks: 832
– Top 10 Constituents

Noble Energy Inc
Applied Materials Inc
AON Plc
NetFlix Inc
Sempra Energy
Kroger Co
Crown Castle International Corp
Cigna Corp
Forest Laboratories Inc
SanDisk Corp

– Major Fund Families Using this Index

iShares

CRSP U.S. Mid Cap Index

– Market Cap of:

Largest Company: $22.4 Billion
Median Company: $8.3 Billion
Smallest Company: $753 Million

– Approximate Coverage of Total U.S. Market Cap: 15%
– Reconstitution: Quarterly
– Number of Stocks: 369
– Top 10 Constituents

Vertex Pharmaceuticals
Delphi Automotive
Western Digital Corp
Mylan Inc
Health Care REIT Inc
Moodys Corp
Southwest Airlines Co
Avalonbay Cmntys Inc
Chipotle Mexican Grill
Seagate Technology

– Major Fund Families Using this Index

Vanguard

U.S. Small Cap Stocks

S&P SmallCap 600 Index

– Market Cap of:

Largest Company: $5.6 Billion
Median Company: $1.1 Billion
Smallest Company: $156 Million

– Approximate Coverage of Total U.S. Market Cap: 3%
– Reconstitution: Quarterly
– Number of Stocks: 600
– Top 10 Constituents

Questcor Pharmaceuticals
Centene Corp
LaSalle Hotel Properties SBI
Teledyne Technologies Inc
Toro Co
Darling Ingredients Inc
Belden Inc
Tanger Factory Outlet Centers
Synaptics Inc
Moog Inc A

– Major Fund Families Using this Index

Vanguard
iShares
SPDR

Russell 2000 Index

– Market Cap of:

Largest Company: $4.5 Billion
Median Company: $751 Million
Smallest Company: $169 Million*

– Approximate Coverage of Total U.S. Market Cap: 9%
– Reconstitution: Annually
– Number of Stocks: 1,975
– Top 10 Constituents

InterMune Inc
Prosperity Bancshares Inc
Aspen Technology Inc
WEX Inc
Isis Pharmaceuticals Inc
Tenneco Inc
PolyOne Corp
Investors Bancorp Inc
Ultimate Software Group Inc
Brunswick Corp

– Major Fund Families Using this Index

Vanguard
iShares
SPDR

CRSP U.S. Small Cap Index

– Market Cap of:

Largest Company: $7.6 Billion
Median Company: $1.5 Billion
Smallest Company: $16 Million

– Approximate Coverage of Total U.S. Market Cap: 13%
– Reconstitution: Quarterly
– Number of Stocks: 1,449
– Top 10 Constituents

Hillshire Brands Co
Salix Pharmaceutical
Foot Locker Inc
Arthur J Gallagher & Com
Harma Intl Inds Inc
Alkermes Plc
Gannett Inc
Packaging Corp Amer
Rite Aid Corp
Snap On Inc

– Major Fund Families Using this Index

Vanguard

[box style=”2″]
Data as of June 30, 2014, except where noted.
* Data as of May 31, 2014

Sources:
S&P Dow Jones Indices LLC, a part of McGraw Hill Financial
Russell Investments
Center for Research in Security Prices at Chicago Booth
The Vanguard Group, Inc.

Disclosures
For important disclosures regarding this and all other material published by Wealth Engineers, please visit: wealthengineersllc.com/disclosures
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Infographic: Index Fund Comparison - Wealth Engineers (2024)

FAQs

What percentage of advisors beat the S&P 500? ›

Less than 10% of active large-cap fund managers have outperformed the S&P 500 over the last 15 years. The biggest drag on investment returns is unavoidable, but you can minimize it if you're smart. Here's what to look for when choosing a simple investment that can beat the Wall Street pros.

Discover More Details ›

Can I get wealthy with index funds? ›

So, can index firms make you wealthy? Not by themselves. They are a great tool to increase your wealth over the long-term, but it depends on you. The more you can invest and the longer you can keep your money invested (and re-invested), the better off you will be.

See Details ›

Do people with a financial advisor beat the market? ›

He or she will help you construct a portfolio that gives you a good chance of reaching those goals, based on the best research available. But even the best financial advisors are at the whim of the market. Most professional investors who try to beat the market actually underperform it over a given time period.

Get More Info Here ›

Why doesn't everyone just invest in the S&P 500? ›

The S&P 500 is all US-domiciled companies that over the last ~40 years have accounted for ~50% of all global stocks. By just owning the S&P 500 you miss out on almost half of the global opportunity set which is another ~10,000 public companies.

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Has Warren Buffett outperformed the S&P 500? ›

Berkshire Hathaway

A big cash pile protects the above-average core operations of this stellar company. Warren Buffett has an incredible track record of outperforming the S&P 500.

Get More Info Here ›

Is Fidelity Go better than S&P 500? ›

You'll get two new stock picks every month, plus 10 starter stocks and best buys now. The average stock pick inside Stock Advisor is up 663% — more than 4x that of the S&P 500! (as of 5/10/2024).

Learn More Now ›

Does Warren Buffett believe in index funds? ›

Despite his exceptional ability to select winning stocks, he emphasizes the value of a diversified investment portfolio, warning against unnecessary risks. His recommendation to consistently invest in low-cost index funds, especially during market volatility, resonates with investors of all levels of experience.

Read On ›

What are the 4 index funds to retire a millionaire? ›

4 Invesco ETFs That Could Help You Retire a Millionaire

Invesco S&P MidCap Quality ETF.
Invesco NASDAQ Internet ETF.
Invesco S&P 500® Quality ETF.
Invesco QQQ Trust.

May 5, 2024

Find Out More ›

What are 2 cons to investing in index funds? ›

Disadvantages of Index Investing

Lack of downside protection: There is no floor to losses.
No choice in the index fund's composition: Cannot add or remove any holdings.
Can't beat the market: Can only achieve market returns (generally)

View Details ›

What is Warren Buffett's advice? ›

His concept of starting with your legacy and working backward, he said, means choosing the right “educational paths” and “social paths” to get you where you want to go. Buffett added that living in modern-day America gave anyone the best chance in world history at accomplishing the things they dream about.

Show Me More ›

Why do financial advisors not like index funds? ›

Study after study shows that it's really tough to outperform index funds over the long-term after accounting for fees. Those that manage to beat the market usually do so by taking on more risk (via leverage or other means) or get lucky with the equivalent of 10 consecutive heads in a coin-flipping contest.

Get More Info Here ›

Is 2% fee high for a financial advisor? ›

Answer: From a regulatory perspective, it's usually prohibited to ever charge more than 2%, so it's common to see fees range from as low as 0.25% all the way up to 2%, says certified financial planner Taylor Jessee at Impact Financial.

See Details ›

Do billionaires invest in index funds? ›

However, while many of them are regarded as financial wizards, often their investments are utterly pedestrian. In fact, a number of billionaire investors count S&P 500 index funds among their top holdings.

What happens to index funds when the market crashes? ›

For instance, in a major sell-off, when an index itself loses value, an index fund holding the underlying securities of the index will also lose value. However, investors who hold on to their fund investments should see the fund value increase as the value of the index itself reverses course and increases.

Are index funds safe during a recession? ›

The important thing to remember about index funds is that they should be long-term holds. This means that a short-term recession should not affect your investments.

Show Me More ›

Do financial advisors outperform the S&P 500? ›

Do financial advisors beat the S&P 500? What is the 20-year average return on the S & P 500? Some financial advisors beat the S&P 500 some of the time. But most of them wouldn't over a long term and most of them would say that shouldn't be your goal either.

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Do most investors beat the S&P 500? ›

Commonly called the S&P 500, it's one of the most popular benchmarks of the overall U.S. stock market performance. Everybody tries to beat it, but few succeed.

Get More Info Here ›

How many traders beat the SP500? ›

Over the past two decades, up until December 2020, fewer than 10% of actively managed US stock funds were able to outperform the S&P 500. Despite having access to sophisticated strategies, research, and analysis, the vast majority of professional investors cannot manage to outperform the market index.

View Details ›

How many portfolio managers beat the S&P 500? ›

You might be surprised to know, however, that 93% of large-cap fund managers lose to the S&P 500 over a 20-year period. That's according to data from S&P Global's latest SPIVA U.S. Scorecard, from the first half of last year. Over three years, it's about 80%.